Pedestrians walk past a Lululemon store.
Scott Mill | CNBC
Lululemon Athletica Inc. On Thursday, quarterly earnings and revenue beat analysts’ expectations as shoppers stocked up on workout gear even as soaring prices hurt apparel sales at other retailers.
The company also raised its outlook for the year. Shares were up about 9% in after-hours trading.
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Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:
- Earnings per share: $2.20, adjusted, vs. $1.87 expected
- Revenue: $1.87 billion vs. $1.774 billion expected
Same-store sales increased 23%, beating StreetAccount’s estimate of 17.6%. Net sales rose 29% to $1.87 billion. The company said traffic remained high both in stores and online, even as soaring inflation was restraining consumer spending.
Lululemon has a higher-income customer base that generally doesn’t seem hampered by inflationary pressures. Still, other high-end retailers like Nordstrom and Macy’s have cut their outlook this quarter on fears of slowing demand. Lululemon, on the other hand, has strengthened its forecast for two consecutive quarters.
“Despite the challenges around us in the macro environment, customer traffic through our stores and e-commerce sites remains robust, a testament to the strength of our multi-dimensional operating model,” said the CFO. Meghan Frank in a statement. Release.
In-store traffic grew more than 30% and e-commerce traffic grew more than 40%, executives said during the earnings call Thursday. The company hopes to further increase loyalty with a soon-to-be-launched membership program.
The membership program was announced at the end of the first quarter. It has a free tier and a $39 per month paid tier that gives subscribers early access to exclusive products and items, as well as invitations to in-person events.
The company said the traffic increases were not attributable to promotional programs or product markdowns.
“We haven’t changed our promotional cadence,” CEO Calvin McDonald said on the earnings call. “We have no intention of doing that.”
Lululemon continued its physical expansion during the quarter, with 21 net new stores for a total of 600 locations.
Inventories rose 85% to $1.5 billion from the same period last year. The company said it was “understocked” in the second quarter of 2021 due to supply chain bottlenecks.
Retailers in general have had to deal with rising inventory levels as shoppers adjust their consumption habits. Lululemon said Thursday it was confident inventory levels would help it boost sales during the holiday shopping season.
The company said it now expects revenue of between $7.865 billion and $7.940 billion for 2022, up from $7.610 billion to $7.710 billion last quarter. The company also raised its adjusted earnings per share outlook to a range of $9.75 to $9.90, from last quarter’s adjusted outlook of $9.35 to $9.50.
The release also maintained the company’s long-term outlook of doubling its net sales to $12.5 billion from 2021 to 2026. The plan includes an expansion of its menswear, footwear and membership-based fitness classes. When the plan is announced in spring, some analysts were skeptical on Lululemon’s ability to achieve the lofty long-term goal.
Read the earnings release here.
This is a developing story. Check back for updates.